Judge prods feds in flood insurance case (DOJ needs to get involved or explain itself)

[maddezmom]

Source: timespicayune.com

Justice Department urged to play active role in whistle-blower suit
Friday, June 08, 2007 By Rebecca Mowbray

The federal judge who unsealed a whistle-blower case last month about insurance companies allegedly overbilling the National Flood Insurance Program is demanding that the U.S. Department of Justice get involved in the case or explain itself.

The unusual move comes from U.S. District Judge Peter Beer, who unsealed a case in which a group of former insurance adjusters say that they have collected evidence that insurance companies have defrauded taxpayers by overbilling the federal flood program while underpaying claims for Hurricane Katrina wind damage to save the companies money.

Beer filed this one-sentence motion in court this week:

"The Court, on its own motion, respectfully requests the United States Department of Justice enter this case by July 9, 2007, or show cause on July 11, 2007, at 9:30 a.m., why they are not intervening in this civil action."

Beer said he was surprised to learn that the U.S. attorney's office in Baton Rouge planned only to monitor the case, which now is being prosecuted on behalf of the U.S. government by a private attorney in New Orleans representing the whistle-blowers, rather than to take it over.



Read more: http://www.nola.com/business/t-p/index.ssf?/base/money-3/118128398867740.xml&coll=1

[salin]

1. I have to wonder how this will play both the info that the DOJ is ignoring

the case (ala INDIFFERENT at best) and the info if/when they fail to respond and act (as I would guess will be the case)- in terms of the upcoming gubenatorial race in Louisiana.

[youngdem]

2. As someone who is directly involved in this here in New Orleans

Let me just tell you that two MAJOR insurers here in town seem to have this strategy. I have handled claims where the flood and wind insurance are carried by the same insurer. What the insurer does in that case (often) is to claim that almost all of the damage was caused by flood, and charge the federal flood program for the damage. They then offer a few thousand in wind damage. The insured goes along with it for two reasons - the insured doesn't care where the money comes from, and insurance will overpay a little as a de facto bribe. This way, the insured doesn't go digging around to find out what the reason is for their overpayment from flood, and the insurance company didn't dip into their cash on hand to pay claims. They in effect are using federal funds to pay claims while keeping all of the premiums paid by homeowners.

I cannot believe that the federal flood program has put up with this so long. This has been a CLEAR pattern of behavior, especially by two majors, and it is costing EVERYONE who has flood insurance, because rates will have to go up to replenish the fund. Insurance companies amazingly had a record profit in 2005, so they have the cash to pay the claims - they just prefer to hire lawyers and lobbyists instead of being lawful corporate citizens.

Does this surprise anyone?

Does it surprise anyone that Bush is allowing insurance companies to rape the federal flood program in order to duck their responsibility to their policyholders and profit off of government largesse?

This case is yet another perversion of the Justice Department for political gain and corporate profits, at the expense of average Americans paying flood insurance across the country.


On an unrelated note, Peter Beer is a HILARIOUS name. He must be a descendant of the Budweiser family - their beer has tasted like piss for decades.

[gratuitous]

3. GOP SOP

Insurance companies are in business to collect premiums, not pay claims, and Republicans understand that. So if the insurance companies can satisfy claims using OPM (other people's money), they will do so. What's mysterious is why the Bush administration is allowing itself to be plundered to the profit of insurance companies. Unless of course, they're receiving big campaign contributions from insurance companies, in which case this would look suspiciously like more Republican corruption, converting public money to their own and their supporters' use. But George W. Bush is such a good, Christian man, we know that can't be true.